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Technology Stocks : IBM -- Ignore unavailable to you. Want to Upgrade?

To: Robert Scott Diver who wrote (3631)	8/3/1998 2:20:00 AM
From: Jules B. Garfunkel	Read Replies (1) \| Respond to of 8218

Scott, Your, " Most of us simple minded investors focus on EPS." It is precisely because most of you simple minded IBM investors focus on EPS, that over the last year and a half, I have written so much on IBM's poor quality of earnings. infoworld.com " You continue to make the argument that the current high price makes stock buybacks a bad decision. I believe you have been making this argument since the stock was at $30 pre-split." Yes this true, but only since $85 post split. "Slowing sales of Notes" might better read "slowing acceleration in sales of Notes". "Potential loss of business in certain areas" applies to all companies. The "stockholders equity" that is important to me is the amount my stock is worth. That has been going up steadily for years." Yes I also acknowledge that IBM can consistantly put the best sin on a negative event than almost any other company I have ever seen. "Did you predict and discount the fact that IBM has the fastest and cheapest mainframes -and- the largest (and fast growing) services business?" Yes, if you go back to my posts in March of 1997 you will see that I did predict this. What I said then is that I didn't think was that these two growth areas would offset all the other negatives for IBM, which I also continue to write about. Jules

To: Robert Scott Diver who wrote (3631)	8/3/1998 9:14:00 AM
From: Jules B. Garfunkel	Read Replies (2) \| Respond to of 8218

Sorry, but I had to run out to a business meeting before I could proof read my previous post. Here is the edited version. Scott, Your, -----"Most of us simple minded investors focus on EPS." It is precisely because most of you simple minded IBM investors, (Your words not mine), focus on EPS, that over the last year and a half I have written so often on IBM's poor quality of earnings. -----"The impact of the Russian computer sale seems minimal IMO" Here are more details on IBM's "virtuous" role in selling Mainframe Computers to Russia's Nuclear Labs infoworld.com. -----"You continue to make the argument that the current high price makes stock buybacks a bad decision. I believe you have been making this argument since the stock was at $30 pre-split." Yes, this is true. When a stock buyback program is used to disguise a "true" comparison of earnings per share, as I believe IBM does, than I will continue to make this argument. However, I have only been complaining of this practice since January 1997, when IBM was at $85 on a post split basis. -----"Slowing sales of Notes" might better read "slowing acceleration in sales of Notes". "Potential loss of business in certain areas" applies to all companies. The "stockholders equity" that is important to me is the amount my stock is worth. That has been going up steadily for years." Yes, I also acknowledge that IBM can, and does, consistently put a better spin on a negative event than almost any other major company that I can think of. I concede they are Masters at this. -----"Did you predict and discount the fact that IBM has the fastest and cheapest mainframes -and- the largest (and fast growing) services business?" Yes, if you go back to my posts of March 1997 you will see that I did predict this. However, as I said then, and continue to believe now, that over time IBM's new mainframes will NOT be a better and cheaper total solution than Intel's Merced's solution. Further, I continue to believe that the growth in Services, even combined with the new Mainframes, will NOT be enough to offset IBM losing revenues in the overall H/S Divisions. Substituting growth in the Services Division which has 21% GPM, for loses in revenues in the Hardware, Software, and PC Divisions with GPM's of 70+%, just won't be enough for IBM's long term growth, no matter how many more MIPs per year IBM ships. Jules